Question

Congress passed the CARES Act to provide an economic safety net during the Covid-19 pandemic shutdown. The CARES Act included stimulus checks that were sent to some households. Households with individuals making up to $75,000 received a $1,200 check and households with married couples making up to $150,000 received a $2,400 check. Think about how the savings rate varies with household income and the utility of savings versus spending when answering the questions below.

1. Explain why Congress only sent stimulus checks to households up to a certain income level. (10 points)

2. Does this program make sense given the fact that there is a severe economic downturn? Why or Why not? (10 points)

3. Does the particular income limit imposed make sense? Should it be higher, lower, or should there be no limit. Provide an explanation for your answer. (15 points)

Answer 1

(a) The impact of corona virus pandamic is immesurable though the developed or the developing nations every economy has its adverse impact on economy as well as on the citizens of every country, and it is too hard too sustain for low and middle income groups. Thus, every nation one way or other coming forward to give and helping hand to the people of their countries. Even according to the IMF also there it was severe economic downturn and it is right time of every government is protect their people and limit the financial crises.

as well as the global economic out look of 2020 is negitive and due to the pandamic it is worst now.

As an advaced economy if Government of US responds through its CARES ACT to provide financial support to ther people its an positive signe to boost up the economy through monotary support during crises.

The support is also given according to their family size it is individuals with dollars 75,000 receving check dollars1200 and the married couples with dollars 150 thousend reciving dollars 2400 check thus, the provision according to their family status and standard of living it is provided.and quite progressive in nature because the consumption of married family according to the members is comparetively more than the single individuals in general, and the ouse hold income of merried though double to that of single individual and this kind of support the consumers purchasing powr after satisfying all their essential needs including savings.

The most important thing to save economy from severe crises is that , consumption and purchasing power shuld'nt be effrect because it may lead to further recession and economic depression thus, this saught of help further protects the economy from future crises.

(b)There should be definately some income limit, as it is not possible for any government to give its equal support to all the citizens irrespective of their financial status and it is even irrational to do so , the population has to be divided and subdivided according to their standard of income.

In the science of economics also it is given, support should be provided according to the level of earnings and with welfare motive. Thus, if specification made in the income level it is easy to get recognize high income group , low income group .And basing on that if the allocation is made it will be further going to be having its positive impact on economy as a whole.

Truly, this is quite essential to have limit on income level because the support is being provided to people too come out of finacial crises and to boost up the economy at this juncture in general the high income groups are enough capable to cope up with the situation thus , support has to be given to the down trodden and further this kind of division helps to get releif to the people and biurden of government will be reduced to some extent.

As the taxes are imposed according to the income level of the people and the provisions also has to be provided in the same manner.